Red River Service Corporation, No. 4590 (November 13, 2003) Docket No. NAICS-2003-10-24-62 UNITED STATES OF AMERICA SMALL BUSINESS ADMINISTRATION OFFICE OF HEARINGS AND APPEALS WASHINGTON, D.C. ) NAICS APPEAL OF: ) ) Red River Service Corporation ) Docket No. NAICS-2003-10-24-62 ) ) Appellant ) ) Decided: November 13, 2003 ) Solicitation No. FA8773-04-R-0001 ) Department of the Air Force ) 38 EIG/PKL ) Tinker Air Force Base, Oklahoma ) ) ) APPEARANCES William J. Place For Appellant Chris Hampton For the Department of the Air Force DIGEST A procurement for monthly operations and maintenance services in support of the base telecommunication system and infrastructure, including maintenance and recurring support services of the base switching system, fiber optic or copper distribution systems on the premise, and all associated equipment is appropriately classified under North American Industry Classification System (NAICS) code 811212 (Computer and Office Machine Repair and Maintenance), rather than NAICS code 517110 (Wired Telecommunications Carriers). DECISION BLAZSIK, Administrative Judge: Jurisdiction This appeal is decided under the Small Business Act of 1958, 15 U.S.C. Section 631 et seq., and 13 C.F.R Parts 121 and 134. Issue Whether the appropriate NAICS code for this procurement is 811212 (Computer and Office Machine Repair and Maintenance) or 517110 (Wired Telecommunication Carriers). Facts On October 15, 2003, the Contracting Officer (CO) for the Department of the Air Force, Tinker Air Force Base, in Oklahoma, issued this negotiated small business set-aside procurement for "Operations and Maintenance of the Base Telecommunication System at Various Locations" and classified it under North American Industry Classification System (NAICS) code 811212 (Computer and Office Machine Repair and Maintenance) with a corresponding $21 million annual receipts size standard. Initial proposals are due on December 2, 2003. Scope of Work The procurement's Scope of Work (SOW) requires the contractor to provide for monthly operations and maintenance services in support of the base telecommunications system (BTS), including switchboard operations. The BTS consists of the base switching system, the fiber optic or copper distribution system, and all associated equipment described in the attachments to the SOW. Overall responsibility to properly maintain and operate the BTS and its equipment shall be the responsibility of the contractor Among the responsibilities of the contractor will be the following tasks: (1) The contractor shall operate and maintain the switching system at acceptable standard performance levels that are measured by a determination of the total systems availability and reliability rating during any given month. For example, a minimum system useable availability of 98.5% shall be maintained by the contractor. (2) The contractor shall maintain the inside and the outside plant cable and equipment and shall perform preventive maintenance inspections, as required, on all switching and power systems. (3) The contractor shall randomly test and document 10% of the space conductors across the cable count of each cable. Finally, the contractor shall provide and deliver remote monitoring of the switch system(s) and shall determine if a recorded problem or system failure is attributable to the switching system or other causes. If the malfunction is determined to be due to causes (outside the contractor-maintained system/equipment), the contractor shall notify the appropriate authorities. The Appeal On October 24, 2003, Red River Service Corporation (Appellant) appealed the CO's NAICS code designation. Appellant asserts the appropriate NAICS code for the procurement is NAICS code 517110 (Wired Telecommunications Carriers), with a corresponding 1,500-employee size standard. In support, Appellant asserts NAICS code 517110 is specific to the requirements of the work to be performed and, if NAICS code 811212 is applied, it will restrict small business competition for these services and "could exclude RRSC [Appellant] from competing for the contract." Appellant also attaches a previous decision of this Office, NAICS Appeal of Red River Service Corporation, SBA No. NAICS-4449 (2001), where this Office held that a procurement, which Appellant claims is similar to the instant one, was properly classified under NAICS code 513310, with a 1,500 employee size standard. Appellant explains that NAICS code 513310 was the predecessor to NAICS code 517110. Accordingly, Appellant asserts the cited case is apposite here. On November 5, 2003, the CO filed her response. She asserts her agency uses NAICS code 811212, because a BTS is basically a computer equipment. All data flows through computer networking. Preventive maintenance on the BTS is performed through the use of a computer. The program and the programmer identify all parts and components that are tied into the switch. If there is a failure within the switch, it is identified through a computer printout. Finally, she asserts, all software upgrades to the switch are performed through the computer. The CO asserts that, since 1990, her procuring agency has awarded in excess of 50 contracts under this NAICS code (and its predecessor Standard Industrial Classification (SIC) code 7378. Currently, the procuring agency has 39 active contracts awarded under NAICS code 811212 in place. The SOW being performed on all of the contracts is identical, although the actual wording of the SOW may be different. Nonetheless, the services to be performed are comparable. Accordingly, the CO asserts there is ample precedent for the application of NAICS code 811212 here. [1] Discussion A NAICS appeal must be filed within ten days after issuance of the procurement. 13 C.F.R. Section 134.304(a)(3). Because the CO issued this procurement on October 15, 2003, and Appellant filed its appeal on October 24, 2003, the appeal is timely. In a NAICS code appeal, Appellant has the burden of proof, by a preponderance of the evidence to show error in the Contracting Officer's NAICS code designation. SIC Appeal of Four Winds Services, Inc., SBA No. SIC-4407 (2000). The correct NAICS code is that which best describes the principal purpose of the services being procured, in light of the industry description in the NAICS Manual. [2] The standard of review is whether the NAICS code designation is based on a clear error of fact or law. 13 C.F.R. Section 134.314. The NAICS code 517110 that Appellant advocates as specific to the requirement of the SOW is defined as: This industry comprises establishments primarily engaged in (1) operating and maintaining switching and transmission facilities to provide point-to-point communications via landlines, microwave, or a combination of landlines and satellite linkups or (2) furnishing telegraph and other non-vocal communications using their own facilities. NAICS Manual at 669. The CO, on the other hand, has assigned NAICS code 811212, which has the following description: This U.S. industry comprises establishments primarily engaged in repairing and maintaining computers and office machines without retailing new computers and office machines, such as photocopying machines; and computer terminals, storage devices, printers; and CD- ROM drives. NAICS Manual at 875. Here, the requirements of the SOW seek a contractor that can provide frequent operations and maintenance services in support of the base telecommunications system. The latter includes a vast array of equipment, including base switching system, fiber optic or copper distribution system, and all other equipments necessary to ensure the proper functioning of the base telecommunications system, as detailed in the SOW. The contractor must also perform preventive maintenance operations and random testing of all the equipment involved in operating the base telecommunications system. As noted by the CO in her response, the BTS is basically a piece of computer equipment through which all data flows through the networking system. All the preventive maintenance is performed through the use of a computer. Thus, NAICCS code 811212 is more specific to the tasks sought in the SOW, if not a perfect match. Further, the case cited by Appellant is, in fact, inapposite. There, the requirements of the contract involved primarily the maintenance of a wired communications system, including telephone switching operations, communication services, and the maintenance and repairs of the involved machinery. In the instant procurement, the BTS is primarily a computer and not a telephone switching operation, which the SOW in the cited case emphasized. The Administrative Judge is constrained to point out that Appellant, except for its reference to the previous OHA decision, has failed to provide any cogent or probative support for the NAICS code it advocates. Accordingly, it has failed to meet its burden of showing an error in the CO's NAICS code designation. [3] The Administrative Judge, accordingly, concludes NAICS code 811212 is appropriate for the instant procurement because the services required by the SOW are best described by that classification in the NAICS Manual. Conclusion The Contracting Officer's NAICS code designation is AFFIRMED, and the appeal is DENIED. This is the Small Business Administration's final decision. 13 C.F.R. Section 134.316(b). ___________________________ GLORIA E. BLAZSIK Administrative Judge _________________________ 1 The record closed on November 12, 2003. 2 Executive Office of the President, Office of Management and Budget, North American Industry Classification System (2002). 3 Appellant's assertion that, if the CO's designation is sustained, it will exclude Appellant from competing for this contract, has no bearing on the sole and principal issue here . the correctness of the NAICS code designation. Posted: November, 2003